Draw the potential GDP line when potential GOP is $16.0 tilion. Label it Price l

Question

Draw the potential GDP line when potential GOP is $16.0 tilion. Label it Price level (GDP price index, 2009-100)a As we move up along the potential GDP ine, A. the prices of goods and services increase and the money wage rate O B. the money wage rate remains constant OC the real wage rate remains constant ( D· the prices of goods and services remain constant s 160 165 170 175 a o Real ODP (trilions of 2009 dolars) Click the graph, choose a tool in the palette and foilow the instructions to oreate your graph.

Explanation / Answer

now potential gdp line is the vertical line reflecting that the output will remain constant irrespective of the changes in prices.

now as we move above the potential gdp line the prices of goods and services increases thus the money value of the wage rate decreases.

so answer is A

the potential gdp line will ve a vertical line at 16 trillion of real gdp, parallel to the price line.

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